Export on Elongated Credit Terms

6A.17

Normally, proceeds of export of goods, other than those for which exporters have been permitted to offer commercial credit, (cf. paragraph 6A.16) have to be realised on the

due date for payment or within six months from the date of shipment whichever is earlier (or 15 months from the date of shipment in respect of exports to Indian-owned warehouses established abroad with the permission of the Reserve Bank). In some cases, however, the overseas buyers may be seeking longer period for payment of proceeds of commodities which are normally exported from India on "cash" terms generally on the ground that remittances of proceeds are not permitted within 6 months or earlier by the buyers' country, in view of its difficult balance of payments position. Exporters intending to export goods on such terms may submit their proposals in form ECT through their banks to the concerned regional office of Reserve Bank for consideration.

Forfaiting

6A.18

(i)

Export-Import Bank of India (Exim Bank) has introduced a scheme of forfaiting

as an instrument of financing exports. It would be in order for authorised dealers to

allow remittance of commitment fee/service charges payable by the exporter as certified by the Exim Bank. Such remittance may be permitted in advance in one lump-sum or at monthly intervals as certified by the Exim Bank. Payment of these fees may be treated analogous to bank charges. In case, however, the commitment fee and other charges exceed 1.5% of the invoice value, the exporter should be advised to obtain prior approval of Reserve Bank.

(ii)

Authorised dealers have also been permitted to introduce a scheme of forfaiting

of medium term export receivables, if they so desire. The procedure as followed by Exim Bank may be followed by authorised dealers in this regard.